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the first quarter of 2022, we engaged a financial reporting consultant to provide outsourced
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accounting and financial reporting services. ● In
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the first quarter of 2022, we also put in place new policies and procedures at the subsidiary
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level to standardize accounting procedures across all business units. We also plan to hire
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additional skilled accounting personnel at the subsidiary companies to implement the policies
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and procedures. We
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intend to complete the remediation of the material weaknesses discussed above as soon as practicable but we can give no assurance that
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we will be able to do so. Designing and implementing an effective disclosure controls and procedures is a continuous effort that requires
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us to anticipate and react to changes in our business and the economic and regulatory environments and to devote significant resources
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to maintain a financial reporting system that adequately satisfies our reporting obligations. The remedial measures that we have taken
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and intend to take may not fully address the material weaknesses that we have identified, and material weaknesses in our disclosure controls
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and procedures may be identified in the future. Should we discover such conditions, we intend to remediate them as soon as practicable.
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We are committed to taking appropriate steps for remediation, as needed. Other
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than in connection with the implementation of the remedial measures described above, there were no changes in our internal controls over
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financial reporting during the first quarter of 2022 that have materially affected, or are reasonably likely to materially affect, our
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internal control over financial reporting. 34 PART
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II OTHER
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INFORMATION ITEM
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1. LEGAL PROCEEDINGS. From
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time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However,
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litigation is subject to inherent uncertainties, and an adverse result in these, or other matters, may arise from time to time that may
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harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect
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on our business, financial condition or operating results. ITEM
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1A. RISK FACTORS. Not
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applicable. ITEM
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2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. We
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have not sold any equity securities during three months ended March 31, 2022 that were not previously disclosed in a current report on
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Form 8-K that was filed during the quarter. We
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did not repurchase any of our common shares during the three months ended March 31, 2022. ITEM
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3. DEFAULTS UPON SENIOR SECURITIES. None. ITEM
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4. MINE SAFETY DISCLOSURES. Not
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applicable. ITEM
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5. OTHER INFORMATION. We
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have no information to disclose that was required to be in a report on Form 8-K during the first quarter of fiscal 2022 but was not reported.
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There have been no material changes to the procedures by which security holders may recommend nominees to our board of directors. 35 ITEM
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6. EXHIBITS. Exhibit
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No. Description
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of Exhibit 3.1 Certificate
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of Formation of 1847 Holdings LLC (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 filed on February
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7, 2014) 3.2 Second
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Amended and Restated Operating Agreement of 1847 Holdings LLC, dated January 19, 2018 (incorporated by reference to Exhibit 3.1 to
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the Current Report on Form 8-K filed on January 22, 2018) 3.3 Amendment
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No. 1 to Second Amended and Restated Operating Agreement of 1847 Holdings LLC, dated August 5, 2021 (incorporated by reference to
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Exhibit 3.1 to the Current Report on Form 8-K filed on August 11, 2021) 4.1 Amended
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and Restated Share Designation of Series A Senior Convertible Preferred Shares (incorporated by reference to Exhibit 4.1 to the Current
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Report on Form 8-K filed on April 1, 2021) 4.2 Amendment
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No. 1 to Amended and Restated Share Designation of Series A Senior Convertible Preferred Shares (incorporated by reference to Exhibit
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4.2 to the Current Report on Form 8-K filed on October 5, 2021) 4.3 Share
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Designation of Series B Senior Convertible Preferred Shares (incorporated by reference to Exhibit 4.1 to the Current Report on Form
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8-K filed on March 2, 2022) 4.4 Form
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of Common Share Purchase Warrant relating to 2020 private placement (incorporated by reference to Exhibit 4.2 to the Current Report
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on Form 8-K filed on October 7, 2020) 4.5 Form
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of Common Share Purchase Warrant relating to 2021 private placement (incorporated by reference to Exhibit 4.2 to the Current Report
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on Form 8-K filed on April 1, 2021) 4.6 Form
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of Common Share Purchase Warrant relating to 2022 private placement (incorporated by reference to Exhibit 4.2 to the Current Report
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on Form 8-K filed on March 2, 2022) 4.7 Warrant
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for Common Shares issued by 1847 Holdings LLC to Leonite Capital LLC on October 8, 2021 (incorporated by reference to Exhibit 4.1
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to the Current Report on Form 8-K filed on October 13, 2021) 4.8 Warrant
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for Common Shares issued by 1847 Holdings LLC to Leonite Capital LLC on October 8, 2021 (incorporated by reference to Exhibit 4.2
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to the Current Report on Form 8-K filed on October 13, 2021) 10.1 Form
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of Securities Purchase Agreement relating to 2022 private placement (incorporated by reference to Exhibit 10.1 to the Current Report
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on Form 8-K filed on March 2, 2022) 31.1* Certifications of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2* Certifications of Principal Financial and Accounting Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1** Certifications of Principal Executive Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2** Certifications of Principal Financial and Accounting Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 101.INS* Inline XBRL Instance Document 101.SCH* Inline XBRL Taxonomy Extension
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Schema Document 101.CAL* Inline XBRL Taxonomy Extension
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Calculation Linkbase Document 101.DEF* Inline XBRL Taxonomy Extension
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Definition Linkbase Document 101.LAB* Inline XBRL Taxonomy Extension
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Label Linkbase Document 101.PRE* Inline XBRL Taxonomy Extension
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Presentation Linkbase Document 104* Cover Page Interactive
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Data File (formatted as Inline XBRL and contained in Exhibit 101) * Filed
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herewith ** Furnished
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herewith 36 SIGNATURES Pursuant
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to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
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the undersigned thereunto duly authorized. Date:
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May 16, 2022 1847 HOLDINGS LLC /s/
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Ellery W. Roberts N Ellery W. Roberts Tit Chief Executive Officer (Principal Executive Officer) /s/
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Vernice L. Howard N Vernice L. Howard Tit Chief Financial Officer (Principal Financial and Accounting
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Officer) 37 10-Q false --12-31 Q1 0001599407 0001599407 2022-01-01 2022-03-31 0001599407 2022-05-13 0001599407 2022-03-31 0001599407 2021-12-31 0001599407 2022-03-31 0001599407 2021-12-31 0001599407 2022-03-31 0001599407 2021-12-31 0001599407 2021-01-01 2021-03-31 0001599407 2021-12-31 0001599407 2021-12-31 0001599407 efsAllocationSharesMember 2021-12-31 0001599407 2021-12-31 0001599407 efsDistributionReceivableMember 2021-12-31 0001599407 2021-12-31 0001599407 2021-12-31 0001599407 2021-12-31 0001599407 2022-01-01 2022-03-31 0001599407 2022-01-01 2022-03-31 0001599407 efsAllocationSharesMember 2022-01-01 2022-03-31 0001599407 2022-01-01 2022-03-31 0001599407 efsDistributionReceivableMember 2022-01-01 2022-03-31 0001599407 2022-01-01 2022-03-31 0001599407 2022-01-01 2022-03-31 0001599407 2022-01-01 2022-03-31 0001599407 2022-03-31 0001599407 2022-03-31 0001599407 efsAllocationSharesMember 2022-03-31 0001599407 2022-03-31 0001599407 efsDistributionReceivableMember 2022-03-31 0001599407 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Washington, D.C. 20549 FORM 10−Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period end March 31 , 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to
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_____________ Commission File Numbe 001-41368 1847 HOLDINGS LLC (Exact name of registrant as specified in its charter) Delaware 38-3922937 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 590 Madison Avenue , 21st Floor , New York , NY 10022 (Address of principal executive offices) (Zip Code) (212) 417-9800 (Registrant’s telephone number, including area code) N/A (Former name, former address and former fiscal year, if changed since last report) Securities registered pursuant to Section 12(b)
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of the Ac Title of each class Trading Symbol(s) Name of each exchange on which registered Common Shares EFSH NYSE American LLC Indicate by check mark whether the registrant
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(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
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months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
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for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant
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has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding
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12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated
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filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions
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of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging
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growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated
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filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☐ If an emerging growth company, indicate by check
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mark if the registrant has elected not to use the extended transition period for comply with any new or revised financial accounting
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standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant
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is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ As of May 12, 2023, there were 5,074,927 common
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shares of the registrant issued and outstanding. 1847 HOLDINGS LLC Quarterly Report on Form 10-Q Period Ended March 31, 2023 TABLE OF CONTENTS PART I FINANCIAL INFORMATION Item 1. Financial Statements 1 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 19 Item 3. Quantitative and Qualitative Disclosures About Market Risk 31 Item 4. Controls and Procedures 31 PART II OTHER INFORMATION Item 1. Legal Proceedings 33 Item 1A. Risk Factors 33 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 33 Item 3. Defaults Upon Senior Securities 33 Item 4. Mine Safety Disclosures 33 Item 5. Other Information 33 Item 6. Exhibits 34 i PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. 1847 HOLDINGS LLC UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Page Condensed Consolidated Balance Sheets as of March 31, 2023 (Unaudited) and December 31, 2022 2 Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2023 and 2022 (Unaudited) 3 Condensed Consolidated Statements of Shareholders’ Equity (Deficit) for the Three Months Ended March 31, 2023 and 2022 (Unaudited) 4 Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022 (Unaudited) 5 Notes to Condensed Consolidated Financial Statements (Unaudited) 6 1 1847 HOLDINGS LLC CONDENSED CONSOLIDATED BALANCE SHEETS March 31, 2023 December 31, 2022 (Unaudited) ASSETS Current Assets Cash and cash equivalents $ 2,297,927 $ 1,079,355 Investments 277,612 277,310 Receivables, net 7,481,706 5,215,568 Contract assets 60,952 89,574 Inventories, net 14,033,937 4,184,019 Prepaid expenses and other current assets 399,119 379,875 Total Current Assets 24,551,253 11,225,701 Property and equipment, net 2,285,402 1,885,206 Operating lease right-of-use assets 2,668,680 2,854,196 Long-term deposits 156,997 82,197 Intangible assets, net 9,928,437 9,985,129 Goodwill 19,452,270 19,452,270 TOTAL ASSETS $ 59,043,039 $ 45,484,699 LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities Accounts payable and accrued expenses $ 12,466,451 $ 6,741,769 Contract liabilities 1,957,411 2,353,295 Customer deposits 2,977,474 3,059,658 Due to related parties 193,762 193,762 Current portion of operating lease liabilities 718,868 713,100 Current portion of finance lease liabilities 187,429 185,718 Current portion of notes payable, net 4,859,816 551,210 Revolving line of credit 2,063,182 - Related party note payable 362,779 362,779 Total Current Liabilities 25,787,172 14,161,291 Operating lease liabilities, net of current portion 2,052,170 2,237,797 Finance lease liabilities, net of current portion 736,993 784,148 Notes payable, net of current portion 127,853 144,830 Convertible notes payable, net 24,864,371 24,667,799 Deferred tax liability, net 187,000 599,000 TOTAL LIABILITIES 53,755,559 42,594,865 Shareholders’ Equity Series A senior convertible preferred shares, no par value, 4,450,460 shares designated; 1,593,940 shares issued and outstanding as of March 31, 2023 and December 31, 2022 1,338,746 1,338,746 Series B senior convertible preferred shares, no par value, 583,334 shares designated; 464,899 shares issued and outstanding as of March 31, 2023 and December 31, 2022 1,214,181 1,214,181 Allocation shares, 1,000 shares authorized; 1,000 shares issued and outstanding as of March 31, 2023 and December 31, 2022 1,000 1,000 Common shares, $ 0.001 par value, 500,000,000 shares authorized; 4,655,636 and 4,079,137 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively 4,656 4,079 Distribution receivable ( 2,000,000 ) ( 2,000,000 ) Additional paid-in capital 47,310,059 43,962,606 Accumulated deficit ( 42,804,608 ) ( 41,919,277 ) TOTAL 1847 HOLDINGS SHAREHOLDERS’ EQUITY 5,064,034 2,601,335 NON-CONTROLLING INTERESTS 223,446 288,499 TOTAL SHAREHOLDERS’ EQUITY 5,287,480 2,889,834 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 59,043,039 $ 45,484,699 The accompanying notes are an integral part of
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these condensed consolidated financial statements. 2 1847 HOLDINGS LLC CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended March 31, 2023 2022 Revenues $ 15,403,538 $ 12,073,878 Operating Expenses Cost of revenues 9,566,508 7,749,130 Personnel 3,026,193 1,577,700 Depreciation and amortization 573,609 511,371 General and administrative 2,315,061 2,166,207 Total Operating Expenses 15,481,371 12,004,408 INCOME (LOSS) FROM OPERATIONS ( 77,833 ) 69,470 Other Income (Expense) Other income (expense) 33,168 318 Interest expense ( 1,817,715 ) ( 906,743 ) Gain on disposal of property and equipment - 32,747 Gain on bargain purchase 2,639,861 - Total Other Income (Expense) 855,314 ( 873,678 ) NET INCOME (LOSS) BEFORE INCOME TAXES 777,481 ( 804,208 ) INCOME TAX BENEFIT (EXPENSE) 270,000 ( 123,000 ) NET INCOME (LOSS) $ 1,047,481 $ ( 927,208 ) NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS ( 65,053 ) ( 54,178 ) NET INCOME (LOSS) ATTRIBUTABLE TO 1847 HOLDINGS $ 1,112,534 $ ( 873,030 ) PREFERRED SHARE DIVIDENDS ( 162,865 ) ( 135,215 ) DEEMED DIVIDENDS ( 1,835,000 ) - NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS’ $ ( 885,331 ) $ ( 1,008,245 ) LOSS PER COMMON SHARE ATTRIBUTABLE TO 1847 HOLDINGS COMMON SHAREHOLDERS’ BASIC AND DILUTED $ ( 0.20 ) $ ( 0.21 ) WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING BASIC AND DILUTED 4,419,917 4,915,655 The accompanying notes are an integral part of
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these condensed consolidated financial statements. 3 1847 HOLDINGS LLC CONDENSED CONSOLIDATED STATEMENTS
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OF SHAREHOLDERS’ EQUITY (DEFICIT) (UNAUDITED) Three Months Ended March 31, 2023 Series A
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Senior Convertible Preferred Shares Series B
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Senior Convertible Preferred Shares Allocation Common Shares Distribution Additional Paid-In Accumulated Non- Controlling Total Shareholders’ Shares Amount Shares Amount Shares Shares Amount Receivable Capital Deficit Interests Equity Balance at December 31, 2022 1,593,940 $ 1,338,746 464,899 $ 1,214,181 $ 1,000 4,079,137 $ 4,079 $ ( 2,000,000 ) $ 43,962,606 $ ( 41,919,277 ) $ 288,499 $ 2,889,834 Issuance of common shares upon settlement of accrued series A preferred shares dividends - - - - - 99,505 100 - 152,568 - - 152,668 Issuance of common shares and warrants in connection with a private debt offering - - - - - 415,605 416 - 1,359,946 - - 1,360,362 Issuance of common shares upon cashless exercise of warrants - - - - - 61,389 61 - ( 61 ) - - - Deemed dividend from issuance of warrants to common shareholders - - - - - - - - 618,000 ( 618,000 ) - - Deemed dividend from down round provision in warrants - - - - - - - - 1,217,000 ( 1,217,000 ) - - Dividends - series A senior convertible preferred shares - - - - - - - - - ( 110,045 ) - ( 110,045 ) Dividends - series B senior convertible preferred shares - - - - - - - - - ( 52,820 ) - ( 52,820 ) Net income - - - - - - - - - 1,112,534 ( 65,053 ) 1,047,481 Balance at March 31, 2023 1,593,940 $ 1,338,746 464,899 $ 1,214,181 $ 1,000 4,655,636 $ 4,656 $ ( 2,000,000 ) $ 47,310,059 $ ( 42,804,608 ) $ 223,446 $ 5,287,480 Three Months Ended March 31, 2022 Series A Senior Convertible Preferred Shares Series B Senior Convertible Preferred Shares Allocation Common Shares Distribution Additional Paid-In Accumulated Non- Controlling Total Shareholders’ Equity Shares Amount Shares Amount Shares Shares Amount Receivable Capital Deficit Interests (Deficit) Balance at December 31, 2021 1,818,182 $ 1,655,404 - $ - $ 1,000 1,210,918 $ 1,211 $ ( 2,000,000 ) $ 21,723,042 $ ( 20,754,394 ) $ 930,812 $ ( 98,329 ) Issuance of common shares upon conversion of series A preferred shares ( 133,333 ) ( 111,986 ) - - - 38,096 38 - 111,948 - - 111,986 Issuance of series B convertible preferred shares and warrants - - 426,999 1,113,650 - - - - 152,350 - - 152,350 Dividends - common shares - - - - - - - - - ( 249,762 ) - ( 249,762 ) Dividends - series A senior convertible preferred shares - ( 128,318 ) - - - - - - - ( 121,455 ) - ( 121,455 ) Dividends - series B senior convertible preferred shares - - - - - - - - - ( 13,760 ) - ( 13,760 ) Net loss - - - - - - - - - ( 873,030 ) ( 54,178 ) ( 927,208 ) Balance at March 31, 2022 1,684,849 $ 1,415,100 426,999 $ 1,113,650 $ 1,000 1,214,181 $ 1,249 $ ( 2,000,000 ) $ 21,987,340 $ ( 22,012,401 ) $ 876,634 $ ( 1,146,178 ) The accompanying notes are an integral part of
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these condensed consolidated financial statements. 4 1847 HOLDINGS LLC CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended March 31, 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ 1,047,481 $ ( 927,208 ) Adjustments to reconcile net income (loss) to net cash used in operating activiti Gain on bargain purchase ( 2,639,861 ) - Gain on disposal of property and equipment - ( 32,747 ) Deferred tax asset (liability) ( 412,000 ) ( 89,000 ) Inventory reserve 30,000 - Depreciation and amortization 573,609 511,371 Amortization of debt discounts 412,650 249,374 Amortization of right-of-use assets 185,516 98,031 Changes in operating assets and liabiliti Receivables ( 344,086 ) ( 539,818 ) Contract assets 28,622 18,731 Inventories 117,414 ( 378,192 ) Prepaid expenses and other current assets 60,533 311,511 Accounts payable and accrued expenses ( 253,717 ) 964,586 Contract liabilities ( 395,884 ) ( 851,454 ) Customer deposits ( 82,184 ) 212,284 Operating lease liabilities ( 179,859 ) ( 83,729 ) Net cash used in operating activities ( 1,851,766 ) ( 536,260 ) CASH FLOWS FROM INVESTING ACTIVITIES Cash paid in acquisitions, net of cash acquired ( 3,670,887 ) - Purchases of property and equipment ( 63,443 ) ( 66,291 ) Proceeds from disposal of property and equipment - 35,498 Investments in certificates of deposit ( 302 ) ( 262 ) Net cash used in investing activities ( 3,734,632 ) ( 31,055 ) CASH FLOWS FROM FINANCING ACTIVITIES Net proceeds from issuance of series B senior convertible preferred shares - 1,266,000 Net proceeds from notes payable 1,410,000 - Net proceeds from issuance of common shares and warrants in connection with a private debt offering 3,549,518 - Net proceeds from revolving line of credit 1,963,182 - Repayments of notes payable and finance lease liabilities ( 69,049 ) ( 58,317 ) Accrued series A preferred share dividends paid - ( 121,455 ) Accrued series B preferred share dividends paid ( 48,681 ) ( 13,760 ) Accrued common share dividends paid - ( 249,762 ) Net cash provided by financing activities 6,804,970 822,706 NET CHANGE IN CASH AND CASH EQUIVALENTS 1,218,572 255,391 CASH AND CASH EQUIVALENTS FROM CONTINUING OPERATIONS Beginning of the period 1,079,355 1,383,533 End of the period $ 2,297,927 $ 1,638,924 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid for interest $ 646,974 $ 484,360 Cash paid for income taxes $ - $ - NON-CASH INVESTING AND FINANCING ACTIVITIES Net assets acquired in the acquisition of ICU Eyewear $ 7,139,861 $ - Deemed dividend from issuance of warrants to common shareholders $ 618,000 $ - Deemed dividend from down round provision in warrants $ 1,217,000 $ - Accrued dividends on series A preferred shares $ 110,045 $ - Accrued dividends on series B preferred shares $ 52,820 $ - Issuance of common shares upon settlement of accrued series A dividends $ 152,668 $ - Issuance of common shares upon conversion of series A preferred shares $ - $ 111,986 Issuance of common shares upon cashless exercise of warrants $ 61 $ - Debt discount on notes payable $ 2,405,419 $ - Financed purchases of property and equipment $ - $ 316,798 The accompanying notes are an integral part of
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these condensed consolidated financial statements. 5 1847 HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2023 (UNAUDITED) NOTE 1—BASIS OF PRESENTATION AND OTHER INFORMATION The accompanying unaudited condensed consolidated
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financial statements of 1847 Holdings LLC (the “Company,” “we,” “us,” or “our”) have been
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